News / Asia

India Struggles to Bridge Economic Gap

A homeless Indian woman begs on a bridge in Mumbai (file photo)
A homeless Indian woman begs on a bridge in Mumbai (file photo)
Anjana Pasricha

Two decades ago, India opened up its tightly regulated economy, unleashing a wave of reforms that transformed the country and put it in the league of the world's fastest growing economies. But many consider the job only partially complete and say the South Asian country needs to bridge the gap between a prosperous middle class and the millions of people who still grapple with poverty.

Dramatic shift

Rajeev Nanda, a software professional, was among a wave of young people who migrated to the United States in the 1980s, because of a lack of job opportunities at home. In 2001, a decade after India opened its socialist-style economy, he returned to establish an office in Bangalore for the U.S.-based company that employed him.

Nanda found a country dramatically different from the one he had left 12 years before.

“When we went, it was a one-way ticket [to the U.S.," explained Nanda. "Then the economy opened up. The opportunities created a different mindset. Suddenly there was a lot of hope and lot of excitement in the air.”

Financial woes

The liberalization drive launched in 1991 came at a time when India was confronting a crisis. It was on the verge of defaulting on its international debt.

Manmohan Singh (file photo)
Manmohan Singh (file photo)

Prime Minister Manmohan Singh - then the country’s finance minister - lifted restrictions on foreign investors, relaxed stifling controls on domestic industry and slashed taxes.

The results were soon evident. India’s economy became the world’s second fastest-growing economy, after China. Led by a thriving information-technology sector, the services sector boomed. Manufacturing industries expanded. Exports flourished. A huge middle class emerged.

Economic boom

The head of the Federation of Indian Chambers of Commerce and Industry, Rajiv Kumar, says the unshackling of the private sector created the economic boom.

“The most important thing in my view is to have freed the Indian entrepreneurial spirit, which is its traditional strength. It had been chained and caged prior to 1991 in the ideology of central planning and socialism etc,” Kumar said.

But, 20 years later, analysts say India’s economic revolution is only partially complete. And, some people worry that it is running out of steam.

For years, investors have waited for a second wave of reforms to open up sectors which are still tightly regulated, such as retail and insurance. Businesses grapple with lack of infrastructure, as everything from power generation to the transportation network falls short. Several Indian companies are investing overseas, rather than at home where they are deterred by problems such as acquiring land for factories.

Unequal growth

But economists say even more pressing is the problem of unequal growth. While one half of the country prospers, the other half continues to grapple with poverty. In the cities, swank, gated residential complexes and gleaming shopping malls contrast with sprawling urban slums.

Poverty is rampant in many backward, rural regions. A little more than 40 percent of the people - about 450 million - live on less than $2 a day.

P. Chidambaram (file photo)
P. Chidambaram (file photo)

Top Indian officials are confident the problem can be addressed by even faster growth. Among them is Home Minister P. Chidambaram, who was formerly finance minister.

“Our biggest failure is that the pace of reduction of poverty has not been fast enough, that the growth of employment has not been fast enough," Chidambaram said. "The pace of reduction of poverty must pick up and that can only happen if growth averages over eight percent and is sustained at nine percent for several years.”

But there are worries that brisk economic growth may not be enough to address problems such as lack of access to schooling and health care for millions of Indians. Rates of malnourishment and infant mortality are among the worst in the world. Millions of children are still unschooled.

Effective governance

A top Indian economist, Swaminathan Aiyar, blames lack of effective governance for such problems.

“It is not enough to say there is some economic growth. I mean what is the condition of your schools? What is the condition of your public health? What is the condition of government services in general? That is the biggest problem that is crying out,” noted Aiyar.

Analysts also say that, in the past year, economic issues have been put on the back burner as the government focuses its energies on fighting allegations of huge official corruption. They say this has led to a policy paralysis in the government.

New focus

Minister Chidambaram says the country needs to put the focus back on the economy to realize its full potential.

“The center stage must once again be restored to growth, to change, to reforms, better governance. So the blips you see today in declining investment or more foreign outward investment, all these can be resolved…..and then outpace even China, that’s not impossible, people are beginning to talk about outpacing China,”  Chidambaram said.

Rajeev Nanda says that, two decades after liberalization, most professionals would rather stay in India than migrate to Western countries.

“In the last few years, I have seen even a reverse, where people do not want to go. They are simply having a better life, better opportunities right here,” Nanda said.

Economists say the challenge in the coming years will be to bridge the gap between the middle class and the poor, so that those living now in urban slums and the countryside can echo the same sentiment.

You May Like

AU Takes Action on Boko Haram, Defers on S. Sudan

African Union is moving forward with a request for a military force to stop the spread of Boko Haram insurgency in West Africa; Ban Ki-moon welcomes decision to form a five-nation force More

Mass Protests Held for 58 Killed in Pakistani Shi'ite Mosque Bombing

Thousands of Shi'ite Muslims took to the streets across Pakistan Saturday to protest a powerful bomb blast at a mosque in Sindh province during Friday prayers, killing dozens of people More

Williams Wins Australian Open with Straight-Set Victory over Sharapova

The win is Serena Williams' sixth in Australia, and her 19th overall Grand Slam title More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Egypt's Suez Canal Dreams Tempered by Continued Unresti
X
Heather Murdock
January 30, 2015 8:00 PM
Egypt plans to expand the Suez Canal, raising hopes that the end of its economic crisis may be in sight. But some analysts say they expect the project may cost too much and take too long to make life better for everyday Egyptians. VOA's Heather Murdock reports.
Video

Video Egypt's Suez Canal Dreams Tempered by Continued Unrest

Egypt plans to expand the Suez Canal, raising hopes that the end of its economic crisis may be in sight. But some analysts say they expect the project may cost too much and take too long to make life better for everyday Egyptians. VOA's Heather Murdock reports.
Video

Video Threat of Creeping Lava Has Hawaiians on Edge

Residents of the small town of Pahoa on the Big Island of Hawaii face an advancing threat from the Kilauea volcano. Local residents are keeping a watchful eye on creeping lava. Mike O’Sullivan reports.
Video

Video Pro-Kremlin Youth Group Creatively Promotes 'Patriotic' Propaganda

As Russia's President Vladimir Putin faces international pressure over Ukraine and a failing economy, unofficial domestic groups are rallying to his support. One such youth organization, CET, or Network, uses creative multimedia to appeal to Russia's urban youth with patriotic propaganda. VOA's Daniel Schearf reports.
Video

Video Mobile Infrared Scanners May Help Homeowners Save Energy

Mobile photo scanners have been successfully employed for navigational purposes, such as Google Maps. Now, a group of scientists from the Massachusetts Institute of Technology says the same technology could help homeowners better insulate their houses and save some money. VOA’s George Putic has more.
Video

Video Filmmakers Produce Hand-Painted Documentary on Van Gogh

The troubled life of the famous 19th century Dutch painter Vincent van Gogh has been told through many books and films, but never in the way a group of filmmakers now intends to do. "Loving Vincent " will be the first ever feature-length film made of animated hand-painted images, done in the style of the late artist. VOA’s George Putic reports.
Video

Video Issues or Ethnicity? Question Divides Nigeria

As Nigeria goes to the polls next month, many expect the two top presidential contenders to gain much of their support from constituencies organized along ethnic or religious lines. But are faith and regional blocs really what political power in Nigeria is about? Chris Stein reports.
Video

Video Rock-Consuming Organisms Alter Views of Life Processes

Scientists thought they knew much about how life works, until a discovery more than two decades ago challenged conventional beliefs. Scientists found that there are organisms that breathe rocks. And it is only recently that the scientific community is accepting that there are organisms that could get energy out of rocks. Correspondent Elizabeth Lee reports.
Video

Video Paris Attacks Highlight Global Weapons Black Market

As law enforcement officials piece together how the Paris and Belgian terror cells carried out their recent attacks, questions are being asked about how they obtained military grade assault weapons - which are illegal in the European Union. As VOA's Jeff Swicord reports, experts say there is a very active worldwide black market for these weapons, and criminals and terrorists are buying.
Video

Video Activists Accuse China of Targeting Religious Freedom

The U.S.-based Chinese religious rights group ChinaAid says 2014 was the worst year for religious freedom in China since the end of the Cultural Revolution. As Ye Fan reports, activists say Beijing has been tightening religious controls ever since Chinese leader Xi Jinping came to office. Hu Wei narrates.
Video

Video Theologians Cast Doubt on Morality of Drone Strikes

In 2006, stirred by photos of U.S. soldiers mistreating Iraqi prisoners, a group of American faith leaders and academics launched the National Religious Campaign Against Torture. It played an important role in getting Congress to investigate, and the president to ban, torture. VOA's Jerome Socolovsky reports.
Video

Video Former Sudan 'Lost Boy' Becomes Chess Master in NYC

In the mid-1980’s, thousands of Sudanese boys escaped the country's civil war by walking for weeks, then months and finally for more than a year, up to 1,500 kilometers across three countries. The so-called Lost Boys of the Sudan had little time for games. But one of them later mastered the game of chess, and now teaches it to children in the New York area. VOA’s Bernard Shusman in New York has his story.
Video

Video NASA Monitors Earth’s Vital Signs From Space

The U.S. space agency, NASA, is wrapping up its busiest 12-month period in more than a decade, with three missions launched in 2014 and two this month, one in early January and the fifth scheduled for January 29. As VOA’s Rosanne Skirble reports, the instruments being lifted into orbit are focused on Earth’s vital life support systems and how they are responding to a warmer planet.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid